Financial Services Committee

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The Committee marked up and passed 11 bipartisan regulatory relief bills this week. The bills are designed to help strengthen the economy, preserve consumer choice and allow more Americans an opportunity to achieve financial independence.

As the Committee began debate on the bills, Chairman Jeb Hensarling (R-TX) said “it is difficult, perhaps even impossible, to be more bipartisan or less controversial than these 11 bills that we consider today -- which means because they are bipartisan, they are modest. Although they are modest, they are not insignificant to our fellow citizens back home or to the community banks and credits unions that our fellow citizens depend on," he said.

Financial Institutions and Consumer Credit Subcommittee Chairman Randy Neugebauer (R-TX) said, “Today, the Financial Services Committee has begun to move the pendulum closer to the direction of reasonable regulation by taking the first step to address much-needed regulatory relief for our Main Street financial ​institutions and the consumers they serve.”

This week the Committee also approved a resolution to create the bipartisan Task Force to Investigate Terrorism Financing. The resolution passed unanimously by voice vote. Serving as the Chairman and Co-Chairman of the Task Force are Rep. Michael Fitzpatrick (R-PA) and Rep. Robert Pittenger (R-NC). Rep. Stephen Lynch (R-CT) will serve as the Ranking Member on the Task Force.

“As the United States pushes back against the tide of terror and extremism that is the enemy of freedom and peace everywhere, it must do so with every tool available – including within the financial system,” said Rep. Fitzpatrick.

Rep. Pittenger said, “America remains the primary target of radical Islamist jihadists, who seek to destroy our way of life and the freedoms we cherish. We must do all we can to mitigate that threat.”

Subcommittee Examines FDIC's Role in Operation Choke Point

The Oversight and Investigations Subcommittee held a hearing to further examine the Federal Deposit Insurance Corporation's (FDIC) role in Operation Choke Point. Operation Choke Point is a program spearheaded by the Department of Justice (DOJ) that has unfairly forced several legal businesses to shut down by closing their bank accounts with certain financial institutions. These businesses have been deemed "high risk" by DOJ and financial regulators due to an alleged higher incidence of consumer fraud, regardless of whether the business has done anything illegal.

The sole witness, FDIC Chairman Martin Gruenberg, admitted that it was a mistake for government officials, including those at the FDIC, to cut off access to financial institutions for businesses deemed as “high risk” regardless of their individual merit.

"Using the term 'reputational risk,' they [FDIC examiners] are warning banks that if they do business with gun dealers, short-term lenders, payday lenders, ammunition manufacturers, smokes apps, and other legal businesses, they will meet the wrath of the FDIC. And if you disagree, Mr. Chairman, we have emails and memos from the FDIC to prove it," said Oversight and Investigations Subcommittee Chairman Sean Duffy (R-WI). "Their purpose is to choke off the business they don't like from the banking system. I've asked Chairman Gruenberg to testify today because I want to know where he got the target list from several years ago and like the IRS, I fear that activists at the DOJ and the FDIC are abusing their power and authority and they're going out to legal businesses and in fact, they're weaponizing government to meet their ideological belief."

Rep. Mick Mulvaney (R-SC) shared the story of a constituent who owns a pawnshop. The bank where she had a 25-year business relationship with told her it could not lend to her because of the nature of her business.

Despite the FDIC's efforts to retract the initial "high risk" list and guidance that prevented innocent business owners from accessing lines of credit, the FDIC has failed to hold accountable government officials who pressured banks to stop servicing businesses.

Committee Reviews SEC's Budget Request and Operations

The Committee held a hearing to review the Securities and Exchange Commission's (SEC) agenda, operations, and Fiscal Year 2016 budget request.

While many Democrats claim the SEC is “underfunded,” Chairman Hensarling pointed out in his opening statement that the SEC budget “has grown tremendously over the years.”

“In fact,” he said, “the SEC’s current budget of $1.5 billion represents an increase of almost 35% since the passage of the Dodd-Frank Act not yet five years ago. In fact, over a 20-year period since 1995, the SEC’s budget has increased by nearly 400%. That is three times greater than our national defense budget has grown at a time when we have to fight the international war on terror.”

The hearing also gave Committee members an opportunity to question the SEC’s rulemaking activities at a time when the SEC and the Department of Labor are crafting more regulations for financial advisers.

Rep. Bruce Poliquin (R-ME) expressed concerns that the proposed regulations will make it more difficult for low and moderate income Americans to save for retirement.

Rep. Ann Wagner (R-MO), who has proposed legislation that would give Americans more freedom to seek sound financial advice, urged SEC Chair Mary Jo White to consider the "potential for increased costs" for investors as a consequence of the Department of Labor's proposed fiduciary rules.

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